When you’re acting as a qualified intermediary, you have a fiduciary obligation to safeguard and protect the funds that are placed in your custody. In order to safeguard the funds correctly, it’s probably a good idea not to comingle the funds with any other client’s monies or with the operating account of the intermediary. Having a separate, segregated account for each client’s monies is a good idea. Furthermore, it’s a good idea to have a qualified escrow deposit agreement signed by the bank that’s holding that deposit stating that the bank won’t release any funds without the client’s written authorization. We can build in further safety protocols by having a verbal call back arrangement where the bank calls the client to confirm via password that their signature is correct and that the movement of the funds is authorized.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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